Future of banking: what next generation operational models are needed?

Composability, partnering with fintechs, and meeting customers on their preferred channel are all important, according to a roundtable of experts. Watch the full roundtable here

Nadya Hijazi, global leader of wholesale digital channels, HSBC
David Morris, chief commercial officer, Yorkshire Building Society
Jasmeet Narang, chief transformation officer and head of operations, Santander
Keith Pearson, AVP, financial services industry goes to market, ServiceNow
David Thomasson, managing director of digital and products, Metro Bank
Fay Wood, head of retail strategy, Natwest

Financial services operators are, according to Keith Pearson of ServiceNow, “the white knights of the pandemic”. They came to rescue people and businesses hit by the collapse of the coronavirus crisis. But, at the risk of the global economy, they must ride again.

However, despite being the savior of many over the past two and a half years, there is an incredible need for banks, in particular, to grow rapidly and offer personalized services and an omnichannel experience. of the customer to rival the best in other industries.

To run in tandem with change, avoid disruption, and continue to fight the good fight, those wishing to lead the future of banking must partner with fintech experts, says Pearson, AVP of the financial services industry. go to market with ServiceNow.

He pointed to a recent Gartner report, 2022 CIO Agenda: A Banking and Investment Perspective, which takes on the challenge. “We are in a time of uncertain volatility, which makes it difficult for banks to plan for an uncertain future,” it said. “Mastering business composability prepares banks to maximize business value regardless of ongoing uncertainty.”

Fay Wood, head of retail strategy at Natwest, set the scene. “There is a looming crisis in the cost of living after unprecedented events – a global pandemic and a war in Europe – that few could have predicted three years ago,” he said. “Managing money and supporting customers with budgeting and financial tools will be critical for the industry. As a result, these services are becoming more embedded in people’s lives.”

Increased duty of care

At the same time, regulators argue that there is a greater responsibility on regulated companies to hold the hands of customers, metaphorically, and support them. Interestingly, some new financial terrain, whether it be cryptocurrencies or buy now, pay later products, for example, is not yet regulated.

In fact, the Financial Conduct Authority’s final regulations on its new Consumer Duty will be available at the end of July and, following consultation, it appears likely to force regulated companies to deliver “best results” for retail client, Wood said. As an example of how NatWest can better educate customers, the recently acquired Rooster Money app, with a pre-paid pocket-money card for ages three and up, is currently freely accessible for 17 million bank customers. “We want to do more for kids,” he added, highlighting the future role of banking.

David Thomasson of Metro Bank, managing director of digital and products, agrees that banks need to support customers better, whether online or offline, and build the trust built over the past two and a half years. “Now, more than ever, they need to talk to someone at the bank,” he said. “While digital is clearly becoming more important, seeing someone face to face is also important. Our data shows that customers may not use a Metro Bank store for two months or even two years, but knowing that there is someone in a trusted environment nearby who can talk to you at a time that suits you is very important. ”

You must be willing to think differently about the structure and operational model of your organization and follow that into your technology investment.

It’s not just individuals who seek that support. Thomasson said 80% of Metro Bank’s business customers have acquired since the start of the pandemic running within an eight -mile radius of a branch. “It shows the importance of banking within a community,” he continued. “A service-driven measure and presence for communities will vary with financial services organizations in the future.”

Metaverse banking

The “big difference” identified by Nadya Hijazi, global head of wholesale digital channels at HSBC, is that banks have to go to customers, not the other way around. In March, HSBC revealed that it had bought a plot of virtual real estate in The Sandbox, an online gaming space, marking the first significant bank robbery in the metaverse. He says: “It’s about making sure your services are available wherever your customer wants, whether it’s in the metaverse or using WeChat in China. You must embed your services and be the center of the community. ”

Banks can’t afford to mitigate change, and need a change of mindset to develop products and services that don’t need to be adjusted, per se, Hijazi warns. “When you have an income stream, there is no driver for change,” he said. “Often, things change because something is not working. But now, it’s dangerous to be complacent because if you don’t improve, you will lose connectivity with customers. ”

This concept resonates with Jasmeet Narang, chief transformation officer and head of operations at Santander UK. “Customers want choice and convenience, not just a load of off-the-shelf products,” he said. “The old stack-them-high and sell-them-cheap approach no longer works. Instead, you need to understand customer needs, and most of all, you need to have that human touch.”

He emphasizes the importance of collaborating across the business and “arranging design around the customer”, using their predicted wants and needs as the star guide, and justification, for any change. “Otherwise, you’ll always work in snares.” However, people must be involved in the service, whatever technology is used. “These are the touch points to gold dust customers and will identify the winners and losers in the future of banking.”

Cultural puzzles and composability

Narang said leaders need to activate a cultural change to drive change. “Top-down sponsorship is important,” he added. “Once you have that and a clear, long -term structure, other things will follow. Also, you have to be honest with your beliefs. The world will throw pandemics and wars at you, and sometimes you have to be nimble. and flexible, but the winners will keep the overall destination in mind. ”

The Yorkshire Building Society’s chief commercial officer, David Morris, believes that “the evolution of distribution banking models will have clear implications, whether it is embedded finance or metaverse banking, along with many examples.New participants, whether challenging banks or technology companies, will find ways to compete in the value chain in a variety of ways.Therefore, that will have huge implications for business models . ”

He continued: “How can you make sure you don’t get left behind or invest in the wrong technology? And how do you build that in an environment where you have to manage legacy infrastructure, macroeconomic uncertainty, and emerging regulations? Running a business and building something else is very difficult, and requires careful prioritization and creative solution design. ”

ServiceNow’s Pearson argues that the winner will be brave banking leaders who want to partner with fintechs, use cloud agility, and are willing to rip up old plans. “You have to be willing to think differently about your organization’s structure and operational model and follow that into your technology investment.”

He suggests that faster banks could focus on building “composability” – essentially, a system design principle that addresses the interoperability of components – in size, preferably. “That’s what the future of banking will look like and feel,” Pearson concludes.

To learn how ServiceNow can enable digital transformation and enhance your organization’s experiences, visit your.servicenow.com/businessinsights

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